Essential Facts:
| 1. | 2Q09 production in the Arkoma Woodford was 4,235 Boepd, 2.0 times second quarter 2008 production of 2,125 Boepd. |
| 2. | Arkoma Woodford production in 2Q09 accounted for 11% of Continental’s production. |
| 3. | The Arkoma Woodford accounted for 19% of year-end 2008 proved reserves. |
| 4. | At June 30, 2009, the Company’s leasehold in the Arkoma Woodford was 46,000 net acres, of which 43% was developed. |
| 5. | As of August 2009, the Company had 1 drilling rig operating in the Arkoma Woodford. |
| 6. | Under our $390 million capital expenditure budget for 2009, Continental plans to spend $46 million for drilling and completion operations in the Arkoma Woodford, as well as $6 million for land and seismic. |
Arkoma Woodford Production History (Boepd)
| 2007 | 2008 | 2009 | ||||
| 1Q | 440 | 1,900 | 4,799 | |||
| 2Q | 586 | 2,125 | 4,235 | |||
| 3Q | 953 | 2,627 | 4,260 | |||
| 4Q | 1,338 | 3,276 |
The Arkoma Woodford Shale is a natural gas producing play in the southeastern Oklahoma counties of Atoka, Coal, Hughes and Pittsburg. In the last several years, the Arkoma has matured into an active unconventional gas resource play with 36 rigs drilling in the play at year-end 2008.
Second quarter 2009 production was 4,235 Boepd, an increase of 99% over second quarter 2008 production. This second quarter total represented 11% of total production companywide. The Company participated in 14 gross wells (2.0 net) during the second quarter of 2009.
We owned approximately 160,000 gross (46,000 net) acres in the Woodford play as of August 2009. We plan to invest approximately $46.0 million drilling 63 gross (8.0 net) horizontal wells in the Arkoma Woodford during 2009. We currently have 1 operated rig drilling in the play.
We drilled our first well in the Arkoma in February 2006, and by year-end 2008 had completed 259 gross (41.4 net) horizontal Woodford wells. Our Arkoma Woodford wells represented 19% of our proved reserves as of year-end 2008.
We completed 115 gross (23.3 net) Arkoma Woodford wells during 2008. Our drilling program in the play consists of a combination of exploratory, step-out and development drilling designed to secure acreage and delineate areas of economic production for further development. Last year this included extending the known boundary of commercial production to the west in our Ashland AMI and south into our Big Mac Prospect. We also completed our first well in the East McAlester area. As of December 31, 2008, approximately 72% of our net acreage in the Arkoma Woodford remained undeveloped.
In 2008, we began to develop the field on various densities, and results indicated that 80-acre development is economically feasible on much of our acreage. We also began to simul-frac (simultaneous fracture stimulation) groups of wells when possible to stimulate and produce the Woodford shale more effectively. An additional benefit to the simul-frac technique is that it minimizes disruption to existing production in adjacent wells.
We also reduced our average cost per lateral foot drilled by 20% in 2008, compared to 2007, through improvements in mud systems, bit selection and operational efficiencies. Finally, during 2008 we demonstrated that we can drill and complete wells across faults that previously limited the length of laterals in these horizontal wells. To guide our drilling, we acquired 49 square miles of 3-D seismic data during the year, bringing the total of 3D seismic we own or have under license to 93 square miles.